The Hindu Business Line : New stocks set to expand market

From April 19,2005: ABB, Allahabad Bank, Ashok Leyland, Bharat Forge, Cadila Healthcare, Century Textiles, Chennai Petro, Kochi Refineries, Colgate, Dabur, Great Eastern Shipping, GlaxoSmithKline Pharma, IDBI, Indian Hotels, Indian Rayon, Indian Overseas Bank, Jindal Steel, Cummins, Matrix Labs, MRPL, Neyveli Lignite, Nicholas Piramal, Patni Computer, Reliance Capital, Siemens, Sterlite Industries, Sun Pharma, Tata Chemicals, UTI Bank, Vijaya Bank, VSNL and Wockardt.

From May 12, 2005: Adani Exports, Amtek Auto, Aurobindo Pharma, Ballarpur Industries, Bongaigaon Refinery, CESC, Chambal Fertiliser, Divi's Labs, Essar Oil, Federal Bank, GNFC, IDBI Bank, IndusInd Bank, Jammu Kashmir Bank, Jindal Stainless, Maharashtra Seamless, MphasiS BFL, NDTV, Ispat Industries, Orchid Chemicals, Punjab Tractors, Titan Industries and TVS Motor.

From May 27, 2005: Alok Industries, Escorts, FDC, IFCI, India Cements, IVRCL Infrastructure, Karnataka Bank, Nagarjuna Fertilisers, SRF, Strides Arcolab, Sterlite Optical, Videocon International and Welspun Gujarat.

The above list of eligible and approved securities is as on April 13, 2005

As the new contracts in 34 additional securities will be available for trading from April 19, 2005, members are requested to take the latest contract.zip, security.zip and fo_participant.zip files from NSE EXTRANET, directory:/faoftp/faocommon on April 18, 2005 after market hours. A detailed list of new contracts introduced for trading (file name: contractsddmmyy.xls) will be available on the path faoftp/faocommon/contracts on April 18, 2005 after market hours. The Market lot details of the 34 securities would be informed to members separately.

This circular shall be effective April 19, 2005.

Jaiprakash Hydro: This security is being added to the list of eligible securities on the F&O segment from April 18, 2005. The symbol would be JPHYDRO. The permitted lot size is 6250.

The new security will open for trading initially in the cash segment on April 18, 2005 and subsequently, the trading will commence in F&O segment for which a separate broadcast will be sent. Based on the base price determined in the security after the opening of the cash market, three in the money strikes, one at the money strike and three out of the money strikes will be made available to the markets is available on www.nseindia.com.

All the members are requested to pick up the latest contract.zip, security.zip and fo_participant.zip files from NSE EXTRANET directory:/faoftp/faocommon on April 15, 2005 and upload the same in NEAT F&O to enable them to start trading in JPHYDRO. In case the latest files are not picked up, the security cannot be set up in the NEAT F&O and members would not be able to trade and view details of the security JPHYDRO. The list of futures contracts which would be available and the list of option strikes from which specific strike prices would be made available for trading on April 18, 2005 is available on the NSE Web site.

Selection Criteria for new stocks

The following criteria will be adopted for selecting stocks and indices on which futures & options contracts would be introduced.

The stock shall be chosen from amongst the top 500 stocks in terms of average daily market capitalisation and average daily traded value in the previous six months on a rolling basis.

The stock's median quarter-sigma order size over the last six months shall be not less than Rs. 1,00,000. For this purpose, a stock's quarter-sigma order size shall mean the order size (in value terms) required to cause a change in the stock price equal to one-quarter of a standard deviation.

The market wide position limit in the stock shall not be less than Rs. 5,00,000. The market wide position limit (number of shares) shall be valued taking the closing prices of stocks in the underlying cash market on the date of expiry of contract in the month. The market wide position limit of open position (in terms of the number of underlying stock) on futures and option contracts on a particular underlying stock shall be lower of :

30 times the average number of shares traded daily, during the previous calendar month, in the relevant underlying security in the underlying segment, or

Twenty per cent of the number of shares held by non-promoters in the relevant underlying security i.e. free-float holding.

Futures & Options contracts may be introduced on new securities which meet the above mentioned eligibility criteria, subject to approval by SEBI. New securities being introduced in the F&O segment are based on the eligibility criteria which take into consideration average daily market capitalization, average daily traded value, the market wide position limit in the security, the quarter sigma values and as approved by SEBI.

The average daily market capitalisation and the average daily traded value would be computed on the 15th of each month, on a rolling basis, to arrive at the list of top 500 securities. Similarly, the quarter sigma order size in a stock would also be calculated on the 15th of each month, on a rolling basis, considering the order book snapshots of securities in the previous six months and the market wide position limit (number of shares) shall be valued taking the closing prices of stocks in the underlying cash market on the date of expiry of contract in the month. The number of eligible securities may vary from month to month depending upon the changes in quarter sigma order sizes, average daily market capitalisation & average daily traded value calculated every month on a rolling basis for the past six months and the market wide position limit in that security.

Source: www,nseindia.com

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